Indonesian Parliament To Propose Coal Fuels as New Energy

Indonesia’s parliament is proposing the inclusion of coal-based energy and nuclear power as “new energy” sources in a draft of a new bill that also proposes renewable energy compensation and incentives.

The draft reviewed by Reuters also proposes increasing the so-called Domestic Market Obligation (DMO) for coal to 30%, from 25% currently, plus the removal of all diesel power plants by 2024.

Indonesia, the world’s biggest thermal coal exporter, uses a DMO to ensure coal supply to the domestic market to ensure sufficient power supply.

It shocked global markets by abruptly banning coal exports for a month in January to address a domestic shortage.

The draft did not provide a breakdown of the targeted share of the energy mix for the renewable sources, nor explain why coal-based energy was included in a bill that was originally about renewables only.

To encourage investment in renewables, lawmakers also proposed the government provides fiscal incentives for investors as well as other support such as providing land, infrastructure, and government guarantee for loans.

It also calls for the government to set aside a budget to compensate the state power company for losses when providing power from renewable sources.

The committee overseeing energy expects the bill to be agreed upon by the wider parliament in a meeting next week before being sent to the government for discussion, lawmaker Sugeng Suparwoto told a hearing on Tuesday.

“Hopefully before the G20 Summit, we already have a new and renewable energy law,” he said.

Indonesia, the current president of the Group of 20 (G20) major economies, is targeting zero emissions by 2060. It will host this year’s leaders’ summit in November.

In a March statement, an Indonesian energy think tank, the Institute for Essential Services Reform, criticised lawmakers for backing legislation it said would continue to support coal usage, despite the country’s climate goals.

It said parliament was accommodating the interests of the coal industry “which wants to continue to gain market share when the coal market for electricity generation declines”.